Financing a business is not a kid’s play. Many people are clueless when it comes down to finding money for starting a new business. As a businessman you need to come up with great ideas, hire right people, and do good marketing. But, you forgot one key element which is capital needs. You need to make plans for capitalizing your business from the day you start your business strategies. For future expansion you should think of a long term capital needs. Short term plans never work.There are several five types of funding options available for financing a new business. It can either be a self fund, funds from family/friends, credits, investors, and loans The first two options is definitely not the smart ones.
There are mainly four types of tiers available for financing a small business. The tier 1 is the largest source of credit in the business world. It is known as the trade credit or business credit. The companies that provide trade credits do not conduct any personal or business credit check. No personal guarantee required.The tier 2 option for financing a business is the advanced trade credit. These companies require a business credit check before releasing any funds. But, the main advantage of having advanced trade credit is that it provides long term agreement, and larger credit lines.
The best option for financing a business is bank lending. This is the tier 3 group which requires business and personal credit check. Personal guarantees are also required. Credit card companies and various banks are the lender that comes under tier 3 finance option.The tier 4 level is more sophisticated and includes investors, venture capitalists and other private investors.This particular financing option is not for someone who is willing to start a new business. The investors mostly look for businesses that are already well established. They require detailed progress and financial strategies of the business.Be ready to answers question about your business plan. So, get the confidence, be prepared and start your exciting journey in the world of entrepreneurship. Good luck!